The concentration of carbon dioxide (CO2) in the Earth’s atmosphere is rising rapidly(1), with the potential to alter many ecosystem processes. Elevated CO2 often stimulates photosynthesis(2), creating the possibility that the terrestrial biosphere will sequester carbon in response to rising atmospheric CO2 concentration, partly offsetting emissions from fossil-fuel combustion, cement manufacture, and deforestation(3,4). However, the responses of intact ecosystems to elevated CO2 concentration, particularly the below-ground responses, are not well understood. Here we present an annual budget focusing on below-ground carbon cycling for two grassland ecosystems exposed to elevated CO2 concentrations. Three years of experimental CO2 doubling increased ecosystem carbon uptake, but greatly increased carbon partitioning to rapidly cycling carbon pools below ground, This provides an explanation for the imbalance observed in numerous CO2 experiments, where the carbon increment from increased photosynthesis is greater than the increments in ecosystem carbon stocks. The shift in ecosystem carbon partitioning suggests that elevated CO2 concentration causes a greater increase in carbon cycling than in carbon storage in grasslands.